Tag Archives: distressed property

“Year-over-year, the number of completed foreclosures decreased about 19 percent to 69,000 in March 2012 compared to 85,000 in March 2011, according to CoreLogic’s National Foreclosure Report for March. Month-over-month, with the number of completed foreclosures in February 2012 at 66,000, foreclosures increased about 4.5 percent in March 2012. On a quarterly basis, foreclosures decreased to 198,000 in the first quarter of 2012 compared to 232,000 through the same quarter a year ago. Overall, since the start of the financial crisis in September 2008, there have been approximately 3.5 million completed foreclosures.

In addition to the yearly and quarterly decreases in completed foreclosures, the number of loans in the foreclosure inventory decreased by nearly 6 percent, or 100,000, in March 2012 compared to the year before.

“Since the foreclosure inventory is also coming down, this suggests that loan modifications, short sales, deeds-in-lieu are increasingly being used as an alternative to foreclosures to clear distressed assets in our communities. This is what was envisioned with the recent National Foreclosure Settlement, and can often be a better outcome for both borrowers and investors,” said Anand Nallathambi, CEO of CoreLogic.

Out of all homes with a mortgage, approximately 1.4 million homes, or 3.4 percent were in the national foreclosure inventory as of March 2012 compared to 1.5 million, or 3.5 percent, the same month a year ago, and 1.4 million, or 3.4 percent, in the prior month of February.

2012 is on track to become a record year for short sales, according to a report from foreclosure data aggregator RealtyTrac.

Sales of U.S. homes in the foreclosure process, typically short sales, rose 33 percent year over year, to 35,000, in January. A total of 32 states saw annual increases in short sales, and 12 states saw more short sales than REO (real estate owned) sales.

The short-sale increase comes after three years of declines following the inauguration of “a new presidential administration with a new approach to the foreclosure problem,” wrote Daren Blomquist, RealtyTrac’s vice president and author of the report.

“Short sales have long held great promise as a market-based solution to the nation’s foreclosure problem, but short sales transactions over the past three years have actually declined after peaking in the first quarter of 2009,” Blomquist said in a statement.

“January foreclosure sales numbers, along with first-quarter foreclosure activity, strongly indicate that downward trend is ending, and we believe 2012 could be a record year for short sales.”

Although REOs continue to outnumber short sales nationwide, there were only 2,600 more REO sales than short sales in January. Nearly a quarter of states had more short sales than REO sales, including Utah, California, Arizona, Florida, Indiana, Colorado, New York and New Jersey, according to the report.

Six out of the 10 states with the highest share of short sales in January were in the West.

Of the 50 largest U.S. metro areas, nine out of the 10 metros with the highest share of short sales in January were in the West, six of them in California.

Even as short sales increase, the prices buyers pay for them have decreased. In fourth-quarter 2011, a pre-foreclosure property sold for an average $184,221, down 11.3 percent from fourth-quarter 2010. In January, such a property sold for $174,120, down 10 percent year over year.

Short sales are also selling for bigger discounts when compared to the average sales prices of nondistressed homes. Short-sale buyers received an average 21 percent discount in January, up from an average discount of 17 percent the year before. RealtyTrac does not take into account property condition or size when calculating discounts for distressed properties.

Short sales in Massachusetts, Missouri and California saw the biggest discounts in January.

Short-sale timelines appear to be getting shorter. After peaking at 318 days in third-quarter 2011, the average number of days it took for a property to go from the start of the foreclosure process to its sale as a pre-foreclosure was 306 days in the first quarter, slightly down from 308 days in the fourth quarter.’

Although foreclosure starts — either default notices or scheduled foreclosure auctions, depending on the state — were down 11 percent from the previous year in March, last month also saw the third straight monthly rise in foreclosure starts.

There are nearly 3.5 million delinquent borrowers nationwide; 41 percent of those borrowers are seriously delinquent and therefore at high risk for entering the foreclosure process and becoming short sales, RealtyTrac said.

Another, bigger potential pool of short-sellers are borrowers with underwater mortgages. More than 12.5 million borrowers owe at least 25 percent more on their mortgage than their home is worth.

“Even if these homeowners aren’t struggling to make mortgage payments and therefore are at low risk for foreclosure, if they need to sell sometime in the next five years it’s likely they’ll need to sell via short sale,” the report said.

Among lenders and loan servicers, Bank of America had the highest short-sale volume in January, followed by Chase and Wells Fargo.

PNC Financial saw the biggest annual jump in short sales, followed by the Federal Housing Administration, Fannie Mae and Freddie Mac combined.

Those three government-backed entities also had the lowest average short-sale prices in January, the biggest declines in average sales price for short sales, the lowest number of average days to sale, and the biggest decrease in time to sell.

The Union Tribune San Diego had a great article on the state of San Diego county foreclosures–they’re currently at a 4-year low! Read the article below:

The number of San Diego County foreclosures in March stayed at its lowest point in more than four years, essentially mirroring the downward trend seen statewide, based on Tuesday’s DataQuick foreclosure report. An improving picture in the distressed market could be attributed to some pick-up in the national economy and increasing number of homeowners who short-sell their homes instead of letting them fall into foreclosure.

A little more than 500 homes fell into foreclosure last month, the lowest it’s been since November 2007, when the county recorded 478. The March total is 21 percent lower than the previous month’s and more than half of what it was a year ago.

Statewide, foreclosures in the first quarter of 2012 fell to their lowest level since the third quarter of 2007, when 24,209 trustee deeds were filed. They peaked at 79,511 in 2008’s third quarter.

Local and statewide numbers for default notices, the official start of the formal foreclosure process, were mixed in March, DataQuick numbers show.

San Diego County recorded 1,500, 17.4 percent bump from February but an 18.3 percent drop from a year ago.

In these financially uncertain times in the housing market, all-cash sales are attractive offers to homesellers, but come with a condition–they usually must settle for less. In a typical housing market, if your home receives multiple offers (from prospective cash-carrying and/or those pre-approved for a loan), you will accept the highest bid. But in this current market, mortgages can be hard to come by, and sellers often will take less in order to have the deal go through.

The outcome: lowering prices despite fewer listings and rising demand. According to the Star Tribune’s article below, the increased amount of cash offers is offsetting other postive trends that, if there weren’t these cash offers, should lead to higher prices.

This all-cash trend is especially prevalent in distressed sales, where investors are the main buyers, and who typically deal with cash as it is. Short sales and foreclosures accounted for 42% of active listings last month, on average in metro areas. Read more about what the Star Tribune has to say on this topic in their article below:

In today’s topsy-turvy housing market, cash rules

Financing uncertainties make those cash offers alluring, but sellers often must settle for less money to guarantee a deal.

When Chris and Diane Finney decided to buy a bank-owned condo in St. Paul, they knew there would be competition.

Their strategy? Offer less — but offer cash.

While others said they would pay more, they needed to finance the deal. The bank took less and took the cash.

“We were in the driver’s seat,” Chris Finney said.

In a normal housing market, multiple bids usually lead to higher home prices, and the highest bid wins. But when credit markets are tighter and appraisals are often lower, many sellers will take less to be sure that the deal will get done.

“If I get five offers on a property and the cash offer is darned close to being one of those top offers, I’d take the cash offer any day,” said Marshall Saunders, owner/broker at Re/Max Results.

In December, 33 percent of all U.S. home sales were cash deals — a record since the downturn started in 2006, according to Campbell Survey and Inside Mortgage Finance. As a result, home prices can’t gain much traction because many sellers won’t necessarily accept the highest offer.

For most home buyers, it’s confounding to be rejected because they are financing the deal. For the housing market, it means more downward pressure on prices despite tight supplies and rising demand.

The volume of cash deals is offsetting other positive trends in the market that should be leading to higher prices. The number of houses on the market has fallen to an eight-year low, and sales are up double digits. At the same time, home prices continue to fall.

At least a third of all homes sales last year involved an investor, Cecala said, and they often pay cash…

In addition to the 5 percent increase in December, NAR reported a 1.7 percent annual increase in existing-home sales in 2011, a total of 4.26 million homes for the year.

Distressed homes made up 32 percent of sales in December, according to NAR’s existing home sales report for the month. Foreclosed home sales closed at about 22 percent below market rate in December, a discount 2 percent higher than that recorded a year earlier.

Investor demand remains steady with 21 percent of homes sold in December going to investors after this category of buyers took 19 percent of purchases in November and 20 percent one year ago.

Cash sales – commonly linked to investors – made up 31 percent of December’s existing-home sales. This rate was 28 percent in November and 29 percent a year ago.

Purchases by first-time home buyers declined in December – both from the previous month and the previous year. First-time home buyers accounted for 31 percent of purchases in December, down from 35 percent in November and 33 percent in December 2010.

Housing inventory is on the decline and fell to its lowest level since March 2005 last month, according to NAR. Approximately 2.3 million homes are available for sale currently.

“The inventory supply suggests many markets will continue to see prices stabilize or grow moderately in the near future,” Yun said.

However, listed inventory is only part of the equation, and according to CoreLogic’s latest numbers, shadow inventory stands at about 1.6 million.

Regardless, Dales believes sales will rise this year. “Housing still won’t contribute much to GDP growth over the next few years, but at least it will no longer subtract from it,” Dales says.

With interest rates at the lowest rate in history, and foreclosures bursting through the ceiling still at this writing, I ask myself, why is this still happening? How does the 1-in-4 upside-down homeowner out there, staring at their bank and scratching their head, get help to avoid walking away?

The empty promises, or the so-called “helping hand” being offered by the banks and the government, is still a joke to say the least. For the people who sold their home in recent years, they are in a position to buy or have already bought another home and recovered from that stress of “What do I do?” while taking advantage of the low interest rates and prices.

It still is not too late to make that leap and start over–because the faster you do, the faster you will recover. Property values are not expected to go anywhere for at least two more years, and the laws for selling short sales that protect homeowners will expire at the end of this year. Laws allow a purchase after two years of selling a short sale. With a consultation with me and strategy, you could pay off most of your unsecured debt, while not paying your mortgage. This can only be done with someone who has had experience with this. I have done this with clients that have recouped while living in their home for over 3 years without paying a mortgage.

The latest reform laws are offering a glimmer of hope; however, when and how these guidelines are implemented by the banks and government is clear to not happen for awhile. The state governments will have to also be on board. At this time, California is weighing the settlement being offered for unlawful foreclosure practices from five of the larger banks that have agreed to pay a settlement.

My opinion is that any settlement should accompany a mandate that the banks must reduce every upside-down property out there to fair market values, to allow the homeowner an opportunity to keep their home; granted that the home is not dilapidated to the point that the owner does not have the funds to repair the home or care for it after the refinance. This exclusion is warranted to the extent that a home that is in bad shape is only dropping or keeping the values low in the neighborhood and should be taken care of. In a perfect world, the banks would allow the homeowner funds after the refinance to repair the home–heck, let’s go for it all!

As always, my gratitude to you for reading my blog. Please share your opinions or questions–I look forward to any questions I can answer or help I can give!

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Heal from Foreclosure

For a Compelling Guide to weaving through ALL the experiences of a hardship with applications for coping personally and with family: having to sell Your Home is unbelievably lightened! Anyone that would never consider selling their home, this is a MUST read.